The backpedaling by bulls continued early Monday as higher interest rates weighed further on sentiment, states Jon Markman, editor of Strategic Advantage.

Fortunately for bulls, they managed to regroup, and technology shares finished the session modestly higher. The Nasdaq 100 index closed at 14,604, a gain of 0.3%. 

Some of this was short covering by bears ahead of a deluge of earnings reports. Alphabet (GOOGL) and Microsoft (MSFT) will report financial results after the close on Tuesday. Announcements from (AMZN) and Meta Platforms (META) are coming a day later.

Financial results for the past quarter and the guidance for the rest of the year will play a big role in determining the trend during the final two months.

Bears are feeling good about the current decline in technology shares, however, some perspective is important. Shares of Alphabet, the parent of Google, are up 54.7% in 2024 on stronger-than-expected guidance given in previous quarters. Bears are betting that there has been significant deterioration. 

This may not be a great wager given the longer-term nature of tech spending. 

Moreover, most of the biggest capitalization tech stocks continue to trade above their respective 50-day moving averages. Tesla (TSLA) is the notable exception, and that weakness may be more about the higher interest rates impacting consumer spending. 

The yield for the 10-year Treasury note rallied briefly on Monday above 5%, a key psychological level. The NDX has important resistance at 15,021, the 50-day moving average.

 Bulls need to reclaim that level through the earnings report deluge. The next important support level for the benchmark is 13,864, the 200-day moving average.

NASDAQ 100 Timing Model: Our NDX timing model turned bullish late last week. Members were instructed to buy the ProShares Ultra QQQ (QLD) at $61.49. The QLD is an exchange-traded fund that delivers 2x the daily performance of the Nasdaq 100 index. Place an order to sell the entire position at $69.50. Also, place a stop-loss order at $56.40.

Learn more about Jon Markman here...